Presently, bank-to-bank flow of funds totals approximately $4 trillion daily. This bank-to-bank flow is handled nearly exclusively by brokers. A downside to the use of brokers to facilitate bank-to-bank transactions is that commission rates tend to be relatively expensive, often falling in the range of three to five basis points paid by each party to the transaction.
There are currently over 14,000 banks, of which 10,000 meet the Federal Reserve's highest capital standards.
The following table shows the ten-year growth rate from 1987 to 1997 for four key types of consumer deposits. Source: web page of Risk Analytics, Inc. (http://www.riskanalyticsinc.com/XSP/articles/article1.xsp)
Annual19871997Growth RateEquity Funds  $195,705$2,294,25727.9%Money Market Funds  $294,540$1,048,29513.5%Bond Funds  $262,425  $737,79910.9%Bank Deposits$3,184,592$4,305,4983.1%
Banks continue to experience strong earnings which fuel capital growth, and they also continue to experience strong asset demands. The missing component is the corresponding growth in retail deposits. As a result of these shifts banks have been increasingly forced to use “wholesale” sources of funds to complement their retail deposits.
An additional factor creating pressure on banks is a desire to avoid investing in directly competing banks, whether competing as a result of parallel geography or other factors. This desire operates in opposition to the reality that it can be convenient to deposit excess funds with similarly situated banks. Such similarly situated banks can tend to be significant competitors.
The disclosure provides a method and system overcoming many of the problems unresolved by the above-discussed prior art. These advantages, as well as additional inventive features, will be apparent from the disclosure provided herein.